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At the request of Professor Ray Taheri of the UBC Engineering Faculty, I gave this guest lecture to all 4th year engineering students in ENGR 499 Capstone Project. From my background in teaching management and entrepreneurial mentorship, I focused on the unique challenges engineers face in considering starting and developing a new venture. I discuss the full range of issues, but my personal emphasis, from experience, is the “character” issue. Some excellent engineers have successfully made the transition to entrepreneurship and executive management, but for others, the odyssey is a bridge too far. Consequently, I place significant emphasis on honest self-analysis and appreciation of one’s strengths and weaknesses. Listening is a priceless skill. If you have experienced Larry Page, he is an excellent example of an engineer who has very successfully transitioned into a senior management role. Sergei, on the other hand, opted for a CTO-like role, which I think was the right choice for him.

Engineer to Entrepreneur from David Mayes

Engineer to Entrepreneur Presentation Transcript

3. Engineer to Entrepreneur Engineering 499 Capstone Project, Winter 2013 David Mayes Lecturer, Faculty of Management ©David Mayes 3
5. ENGR 499, Engineering Capstone Project Instructor Introduction David Mayes: UBC Faculty of Management LinkedIn Profile: http://www.linkedin.com/in/mayo615 UBC Office: EME 4151 (250) 807-9821 / Hours by appt. Email: david.mayes@ubc.ca Mobile: (250) 864-9552 Twitter: @mayo615 Experience: Executive management, access to venture capital, International business development, sales & marketing, entrepreneurial mentorship, technology assessment, strategic planning, renewable energytechnology. Intel Corporation (US/Europe/Japan), 01 Computers Group (UK) Ltd, Mobile Data International (Canada/Intl.), Silicon Graphics (US), Sun Microsystems (US), Ascend Communications (US/Intl.), P-Cube (US/Israel/Intl.), Global Internet Group LLP (US/Intl.), New Zealand Trade & Enterprise. ©David Mayes 5
6. Agenda • Engineer to Entrepreneur: • Common Business Misperceptions • What is Entrepreneurship? • The need for Competitive Advantage • UBC Library “entrepreneurship”resources • UBC Small Business Accelerator ENGR 499, Engineering Capstone Project, Winter 2013 Engineer to Entrepreneur ©David Mayes 6
8. ENGR 499, Engineering Capstone Project Engineer to Entrepreneur: Common Misperceptions Misconception # 1: “Everybody Loves “Cool New Technology” • Not exactly! • Assess commercial viability first! • Listen to potential customers • Validate with third party market research ©David Mayes 8
9. ENGR 499, Engineering Capstone Project Engineer to Entrepreneur: Common Misperceptions Misconception # 2: “I need to go-it-alone to insure quality & design elegance” • Working alone or only with other engineers sounds good, but… • You need a team with diverse skills to build a thriving business • Think “business management” from the outset ©David Mayes 9
10. ENGR 499, Engineering Capstone Project Engineer to Entrepreneur: Common Misperceptions Misconception # 3: “Marketing is fluff and selling is black magic” • If you build it, they will NOT necessarily come! • In reality, many “best designs” lose to competitors with better marketing • Intel 8086 was a “DOG!” ©David Mayes b
11. ENGR 499, Engineering Capstone Project Engineer to Entrepreneur: Common Misperceptions Misconception # 3: “Marketing is fluff and selling is black magic*” *UBCO Library ©David Mayes 11 Davidow, William, (1986); Marketing High Technology: An Insider’s View, New York, The Free Press
12. ENGR 499, Engineering Capstone Project Engineer to Entrepreneur: Common Misperceptions Misconception # 4: “We need to maximize functionality before we focus on customers” • You can’t engineer the right functionality UNTIL you focus on listening to customers • Customers will buy only the functionality they need and want…nothing more ©David Mayes 13
13. ENGR 499, Engineering Capstone Project Engineer to Entrepreneur: Common Misperceptions Misconception # 5: “A good engineer hates unpredictability and risk” • A good entrepreneur embraces risk • Engineer driven solutions are often too little, too late…if they ever ship! • Managing risk is good; trying to eliminate risk is bad ©David Mayes 13
14. ENGR 499, Engineering Capstone Project Engineer to Entrepreneur: Common Misperceptions Misconception # 6: “We can’t worry about making money until we get it built” • If you can’t make money, it isn’t a business • Business and market constraints are key determinants of “getting it right” • Getting it right at the wrong cost = failure ©David Mayes 14
15. ENGR 499, Engineering Capstone Project Engineer to Entrepreneur: Common Misperceptions Misconception # 7 “Outside financing causes loss of control and undue pressure to deliver” • Funding turbocharges a startup company • “Smart money” adds management value • Canadian gov’t grants focus on pure R&D • “Grantsmanship” is bad business strategy • Angels and VC’s focus on making money ©David Mayes 15
16. ENGR 499, Engineering Capstone Project Engineer to Entrepreneur Suggested Reading* Uppuluri, Krishna (2011), Engineer to Entrepreneur, The First Flight, self-published, Krishna Uppuluri * UBCO Library ©David Mayes 16
17. Agenda • Engineer to Entrepreneur: • Common Business Misperceptions • What is Entrepreneurship? • The need for Competitive Advantage • UBC Library “entrepreneurship”resources • UBC Small Business Accelerator ENGR 499, Engineering Capstone Project, Winter 2013 Engineer to Entrepreneur ©David Mayes 17
19. ENGR 499, Engineering Capstone Project What is Entrepreneurship? Entrepreneurial Opportunity • An economically attractive and timely opportunity that creates value. • The best opportunities exists only for the entrepreneur who has the interest, resources, and capabilities required to succeed. ©David Mayes 19
20. ENGR 499, Engineering Capstone Project What is Entrepreneurship? The First Consideration: Your “Character” • Self-analysis: Do you have what it takes to be an entrepreneur? • Discuss your personality, capabilities, strengths and weaknesses with a mentor who knows you. • Listen! • Are you a visionary leader? • What about the chemistry with your team? • Investors will focus on three things: • “The team, the team, and the team.” ©David Mayes 20
22. Drawbacks of Entrepreneurship • Hard work – Finding new customers and markets – Frustrations with financing, government, tax, technology, and employment issues • Long hours – 20% work more than 60 hours per week • Emotional loneliness • Strong possibility of failure • Disruptions to personal life ©David Mayes 22 ENGR 499, Engineering Capstone Project What is Entrepreneurship?
23. Causes of Business Failure • Lack of managerial and financial abilities • Fail to adapt to competitive environment • A broad based study found the following: – 32% inadequate research and development – 23% lacked competitive advantage – 14% uncontrolled costs – 13% poorly developed marketing strategies – 10% poor market timing – 8% succumbed to competitor activities ©David Mayes 23 ENGR 499, Engineering Capstone Project What is Entrepreneurship?
24. Characteristics of Artisan Entrepreneurs • A person with primarily technical skills and little business knowledge: – Paternalistic approach – Reluctance to delegate – Narrow view of strategy – Personal sales effort – Short planning horizon – Simple record keeping ©David Mayes 24 ENGR 499, Engineering Capstone Project What is Entrepreneurship?
25. Characteristics of Opportunistic Entrepreneurs • A person with both business skills and technical knowledge: – Scientific approach to problems – Willing to delegate – Broad view of strategy – Diversified marketing approach – Longer planning horizon – Sophisticated accounting and financial control ©David Mayes 25 ENGR 499, Engineering Capstone Project What is Entrepreneurship?
26. Four Routes to Entrepreneurship Entering a family business Opening a franchised business Starting a new business Buying an existing business ©David Mayes 26 ENGR 499, Engineering Capstone Project What is Entrepreneurship?
27. Agenda • Engineer to Entrepreneur: • Common Business Misperceptions • What is Entrepreneurship? • The need for Competitive Advantage • UBC Library “entrepreneurship”resources • UBC Small Business Accelerator ENGR 499, Engineering Capstone Project, Winter 2013 Engineer to Entrepreneur ©David Mayes 27
29. ENGR 499, Engineering Capstone Project The Need for Competitive Advantage Creating a New Business Entrepreneurs may start a new business from scratch due to several reasons: • A new product or service • Favourable conditions such as location, equipment, employees, suppliers or bankers • To capitalize on competitors’ weaknesses ©David Mayes 29
30. ENGR 499, Engineering Capstone Project The Need for Competitive Advantage Evaluative Criteria – Market Factors ©David Mayes 30
31. ENGR 499, Engineering Capstone Project The Need for Competitive Advantage Evaluative Criteria – Competitive Advantage ©David Mayes 31
32. HMKNT 401, Introduction of Entrepreneurship The Need for Competitive Advantage Evaluative Criteria – Economics ©David Mayes 32
33. ENGR 499, Engineering Capstone Project The Need for Competitive Advantage Types of Ideas That Evolve Into Start-ups ©David Mayes 33
34. HMKNT, Introduction to Entrepreneurship The Need for Competitive Advantage Competitive Advantage • A firm offers a product or service that is perceived by customers to be superior to those of competitors, thereby promoting firm profitability • To establish competitive advantage, a business owner needs to understand the nature of the environment – External – what business potentials exist – Internal – what the firm is able to do ©David Mayes 34
35. ENGR 499, Engineering Capstone Project The Need for Competitive Advantage Sustaining Competitive Advantage • An established, value-creating industry position that is likely to endure over time • Markets are dynamic and in constant flux • Results include superior profitability, increased market share, and improved customer satisfaction ©David Mayes 35
36. ENGR 499, Engineering Capstone Project The Need for Competitive Advantage Assessing the Environment • The Macroenvironment – A broad environment with its multiple factors that affect most businesses in a society • STEEP – Sociocultural, Technological, Economic, Environmental, Political/Legal • Industry Environment – The combined forces that directly impact a given firm and its competitors ©David Mayes 36
37. ENGR 499, Engineering Capstone Project The Need for Competitive Advantage Strategies That Capture Opportunities • Broad-Based Strategy Options –Seek an advantage in cost or marketing • Cost-Advantage Strategy and Options Requires the firm to be the lowest-cost producer » WestJet began as a low-fare, no-frills airline • Marketing-Advantage Strategy Emphasizing the uniqueness of the firm’s product or service » WestJet is moving to differentiate based on quality service ©David Mayes 37
38. ENGR 499, Engineering Capstone Project The Need for Competitive Advantage Environmental and Organizational Impact on Opportunity Assessment ©David Mayes 38
39. ENGR 499, Engineering Capstone Project The Need for Competitive Advantage Core Competencies and Assessing the Organization • Core Competencies • Value-creating organizational capabilities that are unique to a firm • Resources versus Capabilities • Resources are basic inputs that a firm uses to conduct business (capital, technology, equipment, employees, etc.) • intangible and tangible resources • Capabilities are the integration of several resources which are deployed together to the firm’s advantage. ©David Mayes 39
40. HMKNT 401, Introduction to Entrepreneurship The Need for Competitive Advantage Venture Feasibility Assessment Model • Stage 1: Back-of-the-Envelope concept – Potential customers, technology available, match to entrepreneur, financial feasibility » Decision: go or no go • Stage 2: Research and Verification – Detailed analysis of customers, competition, HR required, technical and financial feasibility » Decision: go or no go • Stage 3: Refine the Concept – Detailed business plan » Decision: go or no go ©David Mayes 40
41. ENGR 499, Engineering Capstone Project The Need for Competitive Advantage Taking the Plunge • A Precipitating Event An event, such as losing a job, that moves an individual to become an entrepreneur. Job termination Job dissatisfaction Unexpected opportunity ©David Mayes 41
42. ©David Mayes 42 Mullins, John. (2010) 3rd Edition. The New Business Road Test. Harlow, UK: Prentice Hall, Financial Times Suggested Reading:
43. Agenda • Engineer to Entrepreneur: • Common Business Misperceptions • What is Entrepreneurship? • The need for Competitive Advantage • UBC Library Resources • UBC Small Business Accelerator ENGR 499, Engineering Capstone Project, Winter 2013 Engineer to Entrepreneur ©David Mayes 43
45. UBC Library “Entrepreneurship” Resources UBC-O Library Resources: • UBC Library, Industry Research Resource Guide: http://guides.library.ubc.ca/new_enterprise_development#tabs-6 • UBC, additional Industry and Market Research Resources: http://toby.library.ubc.ca/subjects/subjpage2.cfm?id=660 ©David Mayes 45
46. Agenda • Engineer to Entrepreneur: • Common Business Misperceptions • What is Entrepreneurship? • Start-up and the need for Competitive Advantage • UBC Library Resources • UBC Small Business Accelerator ENGR 499, Engineering Capstone Project, Winter 2013 Engineer to Entrepreneur ©David Mayes 46
50. • entrepreneurship@ubc • http://www.entrepreneurship.ubc.ca/ • UBC Industry Liasion Office (UILO) • http://www.uilo.ubc.ca/pages/entrepreneurship/voucher Additional UBC Resources ©David Mayes 50

Engineer to Entrepreneur Presentation Transcript

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